Offshoring

The U.S. offshore wind energy sector appears to be ready for prime time, and the potential is enormous.

July 7, 2017

U.S. Offshore Wind Energy Expanding

The BF Blog has been keeping an eye on the development of the U.S. offshore wind energy sector for almost a decade. Until 2015, all we could talk about was unrealized potential and stillborn projects.

The latter included the spectacular collapse of one of the largest planned offshore wind projects, the $2.6-billion Cape Wind installation that aimed to install 130 mammoth turbines in the waters of Nantucket Sound off the coast of Massachusetts. Announced with great fanfare by state and federal officials in 2010, Cape Wind was set to be the first offshore wind farm in U.S. waters, generating an estimated 360-million megawatts of clean energy at full capacity.

Two major utilities—NSTAR and National Grid—agreed to purchase 80 percent of the electricity produced by Cape Wind’s turbines. The U.S. Department of Energy earmarked $130 million in stimulus funding to jump-start the project; the Interior Department fast-tracked approvals. But when the project failed to meet a critical year-end deadline to secure federal tax credits, its backers pulled out, leaving Cape Wind dead in the water.

In 2015, Rhode Island succeeded where Massachusetts had failed. RI launched Deep Water Wind off Block Island, a small wind farm consisting of five offshore turbines located three miles off the coast of Block Island and connected to the mainland by an underwater cable. Deep Water Wind became the first commercially operating offshore wind farm in the coastal waters of the United States.

Today, it appears that the offshore wind energy industry finally is poised for a huge breakthrough. Several mega-projects are in the works on the East and West coasts of the U.S.

The potential for offshore wind power is enormous. According to the National Offshore Wind Energy Strategy report, jointly issued last fall by the U.S. Departments of Interior and Energy, “accessible” offshore wind power has the potential to generate more than 2,000 gigawatts of power, which is equivalent to 7,200 terawatt-hours per year of electricity—enough to double the total electric power the U.S. generated in 2015.

“Coastal states have increased their demand for renewable energy deployment through renewable portfolio standards and other mandates. Many legacy fossil fuel, nuclear, and renewable generators are set to retire because of age, cost, or as part of the move toward lower-carbon sources of electricity,” the national strategy report states.

The report notes that land-based wind energy generation in the United States has increased nearly 60 percent and utility-scale solar generation increased more than 1,300 percent since 2011, but most of this renewable generation is located far from coastal load centers, and long-distance transmission infrastructure has not kept pace with this rapid deployment. At the same time, the offshore wind market has matured rapidly in Europe, and costs are now falling.

“These trends suggest that offshore wind has the opportunity to play a substantial role as a source of domestic, large-scale, affordable electricity for the nation,” the national strategy report says.

The Interior Dept. already has issued more than a dozen commercial leases for offshore wind development that could generate more than 15 GW of capacity; the strategy report says the installation of 86 GW of capacity by 2050 is feasible, which would cover about 14 percent of the projected demand for new electricity generation in the coastal U.S. and Great Lakes states.

As the cost of new offshore projects begins its downward descent to a competitive level with other forms of power generation (the cost of offshore-generated electricity is expected to dip below $100/megawatt-hour by 2025), and opposition from beachfront residents, tourism agencies (and, on the Gulf Coast, the offshore oil business) is overcome by the dynamic push for alternative energy, coastal states are beginning to move forward with projects for offshore wind turbine farms.

The joint national strategy report from Interior and Energy also spells out the benefits of a robust offshore wind-energy sector for the U.S.:

Decreased air pollution from other emissions. The United States could save $2 billion in avoided mortality, morbidity, and economic damages from cumulative reductions in emissions of sulfur dioxide, nitrogen oxides, and fine particulates.

Reduced water consumption. The electric power sector could reduce water consumption by 5 percent and water withdrawals by 3 percent.

Increased economic development and employment. Deployment could support $440 million in annual lease payments into the U.S. Treasury and approximately $680 million in annual property tax payments, as well as support approximately 160,000 gross jobs in coastal regions and around the country.

That last projection—a new industry that can generate at least 160,000 new jobs—got our undivided attention. So we decided to create a new state rankings category, Offshore Wind Energy Leaders, to help you keep tabs on which locations are ahead of the curve in this emerging growth sector.

The offshore wind power leaderboard will debut in our 2017 Rankings Report, which will be released on BusinessFacilities.com on July 20.

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